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ESG Funds: Beliefs are the Bottom Line

ESG Funds: Beliefs are the Bottom Line

| February 26, 2020
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We’ve heard Anna Lappe say, “Every time you spend money, you’re casting a vote for the kind of world you want.” This is true not only of the dollars that leave our wallets but also the funds that make up investment portfolios.

Sustainable investing is centered on the idea that investors select funds based on business practices – and by supporting companies that tackle the world’s greatest challenges, we’re investing in progress and a better future. The appetite for this conscientious approach is broader than you might think, but there are a few ways to carry out your commitment:

  1. Investors can screen funds to avoid specific companies or sectors that violate their values (i.e., “Screened Investing”).
  2. Investors can select funds that support issues they care greatly about (i.e., “Thematic Investing”).
  3. Investors can pursue measurable sustainable outcomes in addition to financial returns (i.e., “Impact Investing”).
  4. Investors can evaluate companies based on their environmental, social and governance business practices (i.e., “ESG Investing”).

It used to be that selecting ESG funds was a tradeoff: what you gave up in financial returns you gained in awareness and support for progressive issues, but data show that might no longer be the case. (More on that to come.)

Unless you’re geeks like us and enjoy digging through product research and fund performance, it’s critical you share personal convictions with your financial advisor. When financial planning starts with a discussion about goals and values, we can ensure what’s important to you is reflected in your investment portfolio.

 

Sources:
https://www.ishares.com/us/education/sustainable-investing/resources

https://www.ishares.com/us/literature/brochure/sustainable-investing-framework-guide.pdf

https://www.ishares.com/us/literature/brochure/ishares-sustainable-investing-brochure-website.pdf

https://us.dimensional.com/sustainability

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